«Maybe there is in human nature a deep-seated perverse pleasure in adopting and defending a wholly counterintuitive doctrine that leaves the unini tiated peasant wondering what planet he or she is on.
(Solow [2007])»

«Why do applications [of mathematics] ever succeed? Why is a certain amount of logi cal reasoning occasionally helpful in practical life? Why have some of the most intricate theories in mathematics become an indispensable tool to the modem physicist, to the engineer, and to the manufacturer of atom-bombs? Fortunately for us, the mathematician does not feel called upon to answer such questions. (Bourbaki Journal of Symbolic Logic [1949])»

3 Comments

There ought to be a connection drawn between the remarks quoted here from Alan Kirman and the previous post quoting John Hicks. If, as Hicks suggests and as seems quite plausible to me, economists from one era to the next, must shift their focus, putting forth theories and models that are somewhat ad hoc to the case of the present moment, then drawing these theories and models from a cupboard of market-equilibrium models is deeply problematic. Such models, if applied to a narrow enough slice of time and place, can be made to seem at least minimally plausible an interpretation. But, if a somewhat longer view reveals, as Kirman asserts and as I certainly believe to always and everywhere be the case, an economy that is essentially dynamic and fundamentally incapable of being organized around market equilibrium prices, then economists really are to blame — contra Hicks — for perennial error.
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I am not fond of the rhetoric embodied in the phrase, totalement détachés de la réalité to characterize the fault in the choosing of models from the class of market equilibrium, though I will concede it is an accurate description of the result. I think the fault in the models economist have traditionally chosen since before Voltaire’s Dr. Pangloss’ comic optimism took the stage has been in their logic.
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Mathematical models succeed, when they succeed, and allow us to construct powerful analyses and explanations, because the world is a logical place. What is, in the relation of things, is constrained to what is logically possible. Discover that logic, and the insight necessary to understanding what can be observed, follows.

The logic of the world’s functioning, however, is certainly not constrained merely to what is readily tractable within a simple framework. It is certainly not constrained by a logic chain of excuses for impoverished concepts, unanswered criticism and convenient but wrong-headed improvisation, or falling back when the gears of a logical mechanism cannot be made to turn at all, naked tautology.
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Logic dictates that an economy where people learn about techniques for controlling error and waste, is a dynamic, open system. Such an economy will not be organized around using markets and equilibrium market-prices to dictate an efficient allocation of resources. It is not logically possible. Oh, and incidentally, observation will readily confirm that the actual economies of the developed world are organized by finance and bureaucracy, and market exchange of products and services exists only in exceptional circumstances.

Thanks. Great comment. But — on the news today it was told that Trump will cancel his visit to Denmark because it didn’t want to discuss selling Greenland to the US — I’m not so sure, however, that “the world is a logical place” …

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